Demand-Side Policies — Edexcel Past Paper Questions

With reference to Extract B, discuss the use of quantitative easing in preventing deflation.

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

Evaluate the microeconomic and macroeconomic effects of high interest rates in Ghana, or another developing country of your choice.

One of two options in Section B — candidates answered this or the other.

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

UK inflation, as measured by the CPI, rose to 10.1% in the 12 months to July 2022, compared to 2.0% in the 12 months to July 2021. (Source: adapted from https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/july2022) Evaluate macroeconomic policies, apart from monetary policy, the UK government could use to reduce inflation.

One of two options in Section C — candidates answered this or the other.

2.1.2 Inflation · 2.6.2 Demand-Side Policies

Evaluate the likely microeconomic and macroeconomic effects of tax cuts in the UK.

One of two options in Section A — candidates answered this or the other.

4.5.2 Taxation · 2.6.2 Demand-Side Policies

Evaluate the microeconomic and macroeconomic effects of decreasing interest rates in Kenya, or another developing country of your choice.

One of two options in Section B — candidates answered this or the other.

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

The European Central Bank introduced a new round of quantitative easing (QE) in March 2020, purchasing up to €750 billion of assets. The objective of this QE was to reduce the serious risks to the effectiveness of monetary policy resulting from a significant recession. The European Central Bank’s target for inflation remains at ‘below but close to 2%’. (Source adapted from: https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html) Evaluate the effectiveness of quantitative easing during ‘a significant recession’.

One of two options in Section C — candidates answered this or the other.

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

Evaluate the microeconomic and macroeconomic impacts of ‘a much more expansionary fiscal policy’ (Extract C line 23) on the German economy.

One of two options in Section B — candidates answered this or the other.

2.6.2 Demand-Side Policies

Evaluate the likely microeconomic and macroeconomic effects of a rise in interest rates in Turkey.

One of two options in Section A — candidates answered this or the other.

2.6.2 Demand-Side Policies

Discuss the likely success of the ECB’s quantitative easing programme in moving Eurozone inflation closer to ‘the central bank’s ceiling of 2%’ (Extract A, line 17).

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

Discuss ‘looser fiscal policy’ and ‘supply-side reforms’ (Extract A, lines 20 and 21) that may be used by governments of Eurozone countries to increase economic growth.

2.6.2 Demand-Side Policies · 2.6.3 Supply-Side Policies

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a means of reducing a fiscal deficit.

One of two options in Section B — candidates answered this or the other.

4.5.1 Public Expenditure · 2.6.2 Demand-Side Policies